MSE News: Best-buy savings accounts often beat investing in stock market, study...

bigadaj

Much like Brexit it's very difficult to find any unbiased information.

Barclays equity gilt study is useful but is very pessimistic on cash returns and so over eggs the additional returns from equites and even bonds. And at least it provides a sufficiently long timespan to test the outcome over a number of economic cycles.

gadgetmind

The most valuable message in the article (by which I mean the one I actually agree with!) is that cash should always be used for 5/10 year investments.

colsten

The Monevator opinion on the Paul Lewis findings: http://monevator.com/does-cash-beat-shares/

coastline

An article from Feb 2015 covering the last 30 years..
Equities running 9.9% with dividends reinvested but doesn't mention management fees..?
Cash at base rates with income reinvested running at 6%..
I'm sure you could beat base rates and probably by as much as 1%.?
Maybe equities would come in around 9% or more and cash at 7%..?

http://www.thisismoney.co.uk/money/investing/article-2958803/Cash-stocks-property-best-returns-past-30-years.html

1985 to 2014..

http://i.dailymail.co.uk/i/pix/2015/02/18/25CC560400000578-0-image-a-16_1424276406812.jpg

2000-2014...

http://i.dailymail.co.uk/i/pix/2015/02/18/25CC567800000578-0-image-a-15_1424276401854.jpg

Again it looks like the FTSE has been used in the comparison but comparing with the MSCI World over 30 years theres not a lot in it.
In fact the FTSE is leading over 30 years..

https://www.trustnet.com/Tools/Charting.aspx?typeCode=NM990100,NUKX

Credit-Crunched

Cash beats Shares'....I think Paul lewis needs to re assess his article £10k base capital with compound interest used in article over 21 year Cash = £28,514 Fund Average = £51,176 Woodford = £139,043

dunstonh

This was not a study. It was a farcical article by Paul Lewis with many flaws. A total embarrassment to Paul Lewis and another one for MSE for posting a reference to it.

No sane investor will put 100% of their investments into a FTSE100 tracker. The FTSE100 has consistently been amongst the worst performing indexes in the world for the last 20 or more years. It lacks diversification and is heavy in specific areas which are higher risk and more volatile.

So, in effect, Paul Lewis has taken the best savings options and compared it with one of the worst investment options going.

nb73

gadgetmind wrote: »

It's not a terrible index and I hold a slug myself

How does holding the slug help? Sounds kind of slimy to me.

Malthusian

A total embarrassment to Paul Lewis

I disagree, it's about the level that I expect from him.

Archi_Bald

Another interesting take on the Paul Lewis report, echoing many comments made on here already.

Paul Lewis tweeted that it was "thorough & careful work" to which he will respond. He indicates that he doesn't agree with the assumptions made by the author of this report.

http://www.finalytiq.co.uk/paul-lewis-got-active-cash-beat-equities/

Rollinghome

dunstonh wrote: »

So, in effect, Paul Lewis has taken the best savings options and compared it with one of the worst investment options going.

Not quite.

It should not be assumed that a 1 year fixed rate savings account must always be "the best savings option" while disregarding high interest current accounts and regular savings accounts, which currently pay up to 5% or so as many on this board frequently point out, or accounts with longer fixed terms. (The best savings option will often depend on the sums available for saving and the way rates are moving.)

And to call investing in a FTSE 100 tracker "one of the worst investment options" going may be stretching it just a tad too. I suspect a few on this board have managed worse and it doesn't require a long memory to recall the fall-out from the high commission-paying Arch Cru funds that failed a few years ago, or a few other calamities that cause the possible shortcomings of a FTSE tracker to pale into insignificance.

I suspect Paul Lewis rather enjoys winding up financial advisers. They'll all be gathering on those financial adviser trade sites right now to spit blood at his temerity again. Just as they did when he told them as the guest speaker to a pre-RDR IFA conference that that most IFAs shouldn't be called Independent Financial Advisers because 1) they weren't independent of the investment companies that paid them commission for selling their products and 2) didn't give full financial advice but predominantly sold only investment products that paid them commission. He pointed out there was more to true financial advice than just selling investment products. (I wonder if they still paid him his appearance fee.)

Then he upset them all over again by pointing out that at the route of every recent investment scandal had been sales commission and it should be banned. Many IFAs hysterically pointed out that it was crazy idea that would lead to total disaster. Then, who would have thunk it, that's just what the FSA went and did; and look what has happened since. (I remember one IFA writing he would be taking the FSA to the Court of Human Rights. I wonder if he ever did or just calmed down.)

And now this. The very idea. No wonder he's not the favourite of the investment industry. However as he did also write that cash should not be the main driver of any truly long-term strategy then perhaps some of the outrage is being a little overdone.